San Francisco -- Gov. Jerry Brown, mired in the biggest battle of his new term as governor of California, took time to stop in at the PCBC show here to deliver a keynote address that touched lightly on housing but staked out his determination to pass a balanced budget for the nation’s largest state.
“We must continue to retrench, but it’s going to get ugly,” Brown said.
Brown vetoed the state budget on June 17, blaming both Democrats and Republicans for not making enough concessions on cutting spending and raising taxes. Legislators are now working without paychecks as a result of missing their balanced budget deadline.
Brown’s tenure as mayor of Oakland, during which he helped revitalize the city’s urban core, taught him some land-use lessons, he said. “I found out that every project is opposed by somebody,” Brown dryly observed. The governor also transformed himself from homeowner to renter as he encouraged “people with disposable income” to move into downtown Oakland.
“Now I’m an investor in apartments, and I’m determined to make sure that this [industry] goes well,” Brown told an audience of more than 125 people at PCBC’s Multifamily Trends Conference.
Other speakers at the one-day event were, for the most part, upbeat about the future of apartment building. “I think the next three to five years in multi-family are going to be the best ever,” said Constance Moore, CEO and president of BRE Properties. A number of young adults are finally leaving their parents’ houses and coming into the rental market, Moore said; occupancy rates are rising, and rents are starting to soar.
At a session called “Market Drill Down,” a panel of executives from property management firms talked about the best-performing markets, providing a roadmap, of sorts, for multi-family builders. San Francisco, San Jose and parts of Oakland topped the list, followed by the Seattle and Portland areas. Austin and Denver were also cities where rents were steadily rising. The one common denominator between the cities was job growth, they all agreed.
One big surprise, however, was Phoenix.
“Phoenix has come back a lot stronger than many of us expected,” said Jay Parsons, national market analysis manager for MPF Research. He singled out Chandler and Tempe, just outside of Phoenix, as the most desirable areas for renters and profitable for rental housing owners.
A report published by Marcus & Millichap, a real estate research firm that co-sponsored the conference, claimed that the housing market collapse added 2.5 million households to the rental market. The multi-family sector, financed in part by public REITS, has been ramping up construction. A recent uptick in multi-family permit issuance will require another 12 to 18 months before the new units come to market -- good news for LBM suppliers and their customers.